Carbon Funds

How is the implementation of all the local government Climate Action Plans developed over the past decade going? Too many times the answer is that efforts could be better, but lag due to lack of funding. There is little research available on the details of how local government organizations set or administer sustainable funding mechanisms for climate action and green infrastructure planning and implementation. Yet, we know that budgets for municipal climate action efforts and green infrastructure are often a low priority and underfunded. At the same time, more planning and implementation will be required to comply with a variety of new state policies (e.g., AB2188 Solar Streamlining Act, SB 350 Clean Energy and Pollution Reduction Act, AB876 Compostable organics reporting, new stormwater and active transportation requirements), meet new state and local goals (e.g., water and climate goals, RPS targets, Monterey Bay Power CCA formation), and compete for major grants at the federal and state level (e.g. AB 32 CA Global Warming Act Auction Funds).
Carbon Fund is a catch-all phrase we use to refer to “Sustainability” or “Green” or “Energy” Funds and these funds can take many different formats. In general, a Carbon Fund is a mechanism to generate contributions or fees from individuals, businesses, nonprofits, and other parties to fund emissions reductions projects and initiatives. In turn, the funds generally disburse monies to sanctioned projects, which are often pre-defined by the fund’s rules. Carbon Funds can provide financing for GHG reduction projects prior to project implementation, thus reducing project risk by providing the upfront investment needed for many projects.
Carbon Funds have been implemented at the international, national, state and regional levels, but only a handful of local governments and regional agencies have developed local Carbon Funds. In some cases, Carbon Funds have used carbon offsets as a mechanism to measure and verify reductions and to develop tradable credits. In California, the cap-and-trade program tied to the state’s reduction goals in Assembly Bill 32 (AB32) allows regulated entities to reach their emissions threshold in part by purchasing verified offsets. Many other municipalities and education institutions have some version of a Green Revolving Loan Fund (GRLF), i.e. El Cerrita, CA, San Jose, CA and an emerging UCSC GRLF. Other municipalities hold voluntary contributions from the community or employees in Sustainability Funds. The Issaquah, WA Community Sustainability Fund generates funds for projects and programs like neighborhood cleanups, community gardens, green businesses and bike and walking programs. The Community Sustainability Fund is funded by a voluntary donation on monthly waste and recycling bills. Funds are held in a dedicated account and cannot be used for other purposes.
EcoShift is unique in its experience developing Carbon Funds for government, education and non-profit agencies. We can help you understand your options, and assess your fund generation potential. Please see our recent Carbon Fund Webinar slide deck for a more in-depth review of 4 Carbon Fund case studies and best practices.